The hotel is believed to be the Ninawa International Hotel, which received a number of positive reviews before being overtaken by militants and stripped of its branding, The Independent reported.
Pictures circulated by Islamic State of Iraq and Syria-affiliated social media accounts show members tending to a well-maintained garden, polishing floors and cleaning windows, expansive swimming pools and two black ISIS flags flying at the front of the multi-storey building.
It has 262 rooms, two restaurants, two ballrooms and a gymnasium, among other facilities, the report said.
ISIS-affiliated Twitter accounts were promoting an event to mark the hotel's opening night on May 1, where all Muslims were told they could attend for free.
Images from the event show dozens gathered around pools during the day, followed by a firework display in the evening.
Charlie Winter, a researcher for the counter-extremism think tank Quilliam, said the propaganda was likely an attempt by ISIS to suggest bombing campaigns by the US-led coalition had not managed to destabilise the group or life in territories under its self-declared caliphate.
"I think the message the propagandists are trying to portray is that if the coalition is really causing damage then ISIS wouldn't be able to host gala dinners with fireworks at a luxury hotel," he was quoted as saying by the daily.
The US-led coalition launched 12 air strikes in Iraq against ISIS targets yesterday.
Mosul was one of the first cities to be seized by the group during its bloody advance in 2014 and bombing campaigns regularly target this stronghold.
Winter said he believed the hotel was for visiting commanders and dignitaries, although this has not been stated by the group's media arm.
The images are a departure from ISIS' typical propaganda, which usually depicts buildings and monuments being bulldozed as opposed to maintained, the report said.
It is furthermore off-message by showcasing luxurious surroundings that only some can afford, a concept more familiar within Western capitalist society, undermining the notion propagated by ISIS of an inclusive caliphate that serves everyone who swears allegiance to it, it said.

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